Order-Level Materials (OLMs) play a critical role in the flexibility and effectiveness of the GSA Multiple Award Schedule (MAS) program. They allow contractors to include incidental supplies or services needed to complete a specific task or delivery order, even if those items were not part of the contractor’s original Schedule contract.
Let us walks through the fundamentals of OLMs, common use cases, and key rules contractors should know to stay compliant.
What Are OLMs?
OLMs are additional supplies or services required to complete a particular government order. They are not pre-priced or listed on a contractor’s base GSA MAS contract, but can be added at the order level when needed.
For example, if you’re hired to install a network system for a federal office and discover the building requires longer cables and additional wall brackets, you can include these as OLMs to ensure the project is completed properly.
Why OLMs Matter
OLMs are designed to make federal acquisitions more practical and less restrictive. They:
- Fill in the gaps where incidental items or minor services are needed.
- Support broader solutions by enhancing the main scope of the contract.
- Provide flexibility without requiring contractors to modify their core MAS contract each time a small, incidental need arises.
However, OLMs are not meant to be the main focus of any order, they must remain supportive and incidental.
The 33.33% Limitation
One of the most important rules around OLMs is the cost cap:
- The cumulative value of OLMs on an order cannot exceed 33.33% of the total order value, unless specifically authorized by the Contracting Officer.
- This limitation is specified in GSAR Clause 552.238-82.
Travel costs are excluded from this cap, as they are managed separately.
Where OLMs Can Be Used
OLMs can be incorporated into orders issued under the following contract types:
- Firm Fixed Price (FFP)
- Time and Materials (T&M)
- Labor-Hour (LH)
They cannot be used in cost-reimbursement orders.
Importantly, OLM Contract Line Item Numbers (CLINs) must always be set up as T&M, even when the rest of the order is fixed-price. This creates a “hybrid” order structure, ensuring flexibility for pricing incidental items.
OLMs vs. Open Market Items
It’s easy to confuse OLMs with open market items, but they’re not the same:
- OLMs are added under the OLM SIN and must follow MAS rules.
- Open Market Items are outside the contractor’s Schedule entirely and must follow FAR 8.402(f), which requires compliance with competition rules and fair pricing.
Pricing and the Industrial Funding Fee (IFF)
- OLM costs must be established as fixed amounts, not percentages. This includes any indirect costs, overhead, or markups.
- OLM pricing must also include the MAS Industrial Funding Fee (IFF) of 0.75%, though this is built into the total price and not shown separately.
Establishing Fair and Reasonable Pricing
The ordering Contracting Officer is responsible for determining whether OLM pricing is fair and reasonable. This is usually done by:
- Comparing quotes from multiple vendors (commonly three, though not always mandatory).
- Checking prices against similar items or services on Schedule contracts.
- Documenting the analysis in accordance with FAR 15.404.
Contractors with an approved purchasing system under FAR 44.3 may not need to obtain three quotes every time, as their procurement practices are already validated.
Special Note on Travel Costs
Travel costs are not considered OLMs. Instead, they are handled separately under:
- FAR 31.205-46 (which governs travel cost principles and reimbursements)
- GSA Clause C-FSS-370(b) (which requires that travel reimbursements follow federal travel regulations)
These costs do not count toward the 33.33% OLM cap and do not include the IFF.
RFQs and OLM Responsibilities
It’s important to distinguish the responsibilities of agencies versus contractors when OLMs are involved:
- Agencies / Ordering Contracting Officers (OCOs): When building an RFQ that includes OLMs, agencies must clearly identify OLMs as separate CLINs, specify that they support the order (not serve as the primary requirement), and ensure the 33.33% threshold is not exceeded. The OCO must also determine fair and reasonable pricing for OLMs.
- Contractors: When responding to an RFQ with OLMs, contractors must provide detailed pricing for those CLINs, ensure OLMs are incidental to the main solution, and comply with the 33.33% cap. Contractors should be prepared to provide supporting documentation (e.g., supplier quotes) if requested by the OCO.
This separation of responsibilities ensures clarity in the procurement process and keeps both sides compliant with master GSA Schedule rules.
Key Takeaways for GovCon Professionals
- Flexibility with Control – OLMs provide needed flexibility but come with strict limits.
- Compliance is Critical – Understand the 33.33% cap, T&M CLIN requirement, and IFF inclusion.
- Travel is Separate – Never treat travel costs as OLMs.
- Roles Matter – Agencies must build RFQs correctly which are intended to be released under GSA schedule on e-buy etc, while contractors must respond with compliant OLM pricing and documentation.
- Documentation Matters – Price reasonableness must always be well-documented for audit readiness to support the requirements over the top of GSA MAS established items/services.